As the Canadian stock market continues to remain volatile, investors’ interest in dividend stock is rapidly growing. This is because dividend stocks can help investors not only in making steady returns in the long run but also in earning reliable passive income, even in a difficult market environment.
While the TSX Composite Index has gained 2.8% in 2023 so far, it has seen a nearly 3% correction in the last month due to growing macroeconomic uncertainties and the possibility of a moderate recession. Nonetheless, this short-term market correction presents an opportunity for investors to buy some quality dividend stocks at a bargain to hold for the long term.
In this article, I’ll highlight two attractive, beaten-down Canadian dividend stocks I find worth buying on the dip in June 2023 to hold for at least the next 10 years.
Nutrien (TSX:NTR) is a Saskatoon-headquartered crop inputs and services company with a market cap of $37 billion. The company makes most of its revenue by retailing various chemical nutrients for agriculture. After consistently rising in the previous couple of years, its share prices have gone down by nearly 25% this year so far to $74.42 per share. At this market price, it has annualized dividend yield of 3.8% and distributes its dividends every quarter.
In 2022, Nutrien’s adjusted earnings jumped by about 112% YoY (year over year) with the help of a solid 109% jump in its total sales, despite facing continued supply chain disruption and volatility in the prices of agricultural products.
While nitrogen supply constraints, geopolitical issues, and weather-related challenges are expected to hurt its financial growth in the ongoing year, these challenges might not have a major impact on Nutrien’s long-term growth trends, as the demand outlook for agricultural products and services remains robust. Given that, the recent sharp declines in NTR stock look like an opportunity for long-term investors to buy this amazing Canadian dividend stock cheap in June.
Stelco Holdings (TSX:STLC) is another beaten-down Canadian dividend stock that looks undervalued to buy for the long term. This Hamilton-based steel and steel products maker has a market cap of $2.3 billion, as its stock trades at $41.47 per share after losing nearly 21% of its value in the second quarter of 2023. STLC stock offers a 4.1% annualized dividend yield at the current market price and distributes these dividends on a quarterly basis.
In the first quarter this year, Stelco’s adjusted earnings dived by 95% YoY to $0.18 per share as its revenue fell 24.2% from a year ago to $687 million. Consistently declining steel prices and higher input costs due mainly to inflationary pressures have been two of the key reasons for its dismal financial growth in recent quarters.
Nonetheless, Stelco’s management remains confident that the company will be able to improve its financial performance in the coming quarters, as lead times continue to normalize and inflationary pressures continue to ease, lowering its input costs. Considering these factors, along with its strong long-term fundamentals, STLC stock could be worth considering after its recent drop.